Tuesday, October 11, 2011

Nike, top sports brand in China, plans to build new campus in Shanghai

Nike Inc., which has targeted China for its vast sales growth potential, plans to build a campus in Shanghai similar to its world headquarters in Washington County.

The expansion isn't surprising.

Nike, the world's largest sporting goods company, has emerged as the top sports brand in China with a growing roster of stores in China that now stands at about 7,300 -- a number that reflects one of the big differences in marketing in that country compared with the U.S.

Company officials have repeatedly stated Nike's goal of expanding in China, and the company has substantial cash reserves to finance the expansion.

Nike confirmed Thursday evening it is building a campus in Shanghai but declined to offer any details.

Some members of a business group accompanying Oregon Gov. John Kitzhaber on his recent trip to China heard a Nike official share the plans for a Shanghai headquarters. In turn, Tim McCabe, director of Business Oregon, talked about the plans on Wednesday at a gathering of about a hundred business leaders and others at the World Trade Center in downtown Portland, said David Porter, publisher of the blog "Global Strategies."

McCabe declined to comment further on Thursday.

Given Nike's expansion plans in China, as well as the fact the company already has a sprawling European headquarters, it "would be a logical next step" to build a campus in China, said Paul Swangard,managing director of the Warsaw Sports Marketing Center at the University of Oregon.

"Clearly, Nike is winning the battle, the sports brand battle, in China," said Swangard, who was part of a contingent from the Warsaw school that spent two weeks in China in September.

Besides its 17-building campus near Beaverton that opened in 1990, Nike also operates a European headquarters in Hilversum, the Netherlands, which opened in 1999. It includes five buildings, an athletic track, a soccer field and a grandstand used in the 1928 Amsterdam Olympics. The facility features several sustainable features: water flows from roofs to cisterns, the wood is from certified forests and the bricks are local.

While this month marks Nike's 30th year in China, the nation of more than 1.3 billion people emerged as a key market for Nike with the 2008 Summer Olympics in Beijing.

It took Nike 25 years to reach $1 billion a year in sales in China and the company doubled that number by the end of the last fiscal year. Nike officials have said they are confident of doubling the figure again in another four years. (The company overall recorded nearly $21 billion in the fiscal year ending in May.)

Mark Parker, president and chief executive officer of Nike, and several other Nike executives, offered multiple clues about the company's plans for China at an Investor Meeting in June at their campus.

"In 20 years, up to 65 percent of the world's population could be middle class," Parker told about 80 stock analysts, institutional investors and others. "And most of that in China, India and Brazil. And we're performing very well in these developing markets and we're ideally positioned to capitalize on their potential."

Part of that preparation in China included the opening in February of a nearly 660,000-square-foot distribution center in Taicang, Jiangsu, China. The China Logistics Center recently became the first facility of its kind to earn the highest possible LEED designation in China.

Charlie Denson, president of the Nike Brand, told the investors group in June that China, as well as Brazil, are "extraordinary growth opportunities for the Nike Brand."

"Let's go back a couple of years," Denson said. "Coming out of Beijing (Summer Olympics), we said we have one strategy, we want to undeniably win and we want to separate from the competition.

"We were going to do that with leadership from three categories. It was going to be driven by three categories, basketball, running and sportswear. Now, we've been operating in China for almost 30 years. Actually, a little over 30 years. We've been the number one brand for most of that time. But we wanted to end the debate. We wanted to make it very clear.

"Today, I can stand before this group and unarguably say we are clearly the number one brand in China."